Series 7 practice questionmediumReferral Program — Conflicts of Interest
A registered rep participates in a networking arrangement at a bank. If the rep receives compensation for referrals, what must be ensured to comply with FINRA rules?
- AThe bank must provide written approval for each referral.
- BThe rep must share the compensation with unregistered bank staff.
- CThe rep can accept compensation without restriction.
- DThe rep must disclose the compensation arrangement to clients.✓ Correct answer
Explanation
Why D — The rep must disclose the compensation arrangement to clients.
FINRA requires disclosure to clients when compensation is paid in connection with referrals to avoid undisclosed conflicts of interest.
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